Closely parsing the language in an arbitration clause, the California state court of appeals recently reversed an order compelling arbitration of a dispute between a lawyer and his client-turned-business-partner. The lawyer must now defend against a $1.5 million claim based on malpractice and breach of the operating agreement that the lawyer had drafted in connection with his real estate venture with the former client. With arbitration provisions becoming a common feature of lawyer-client retainer agreements, this ruling is worth attention.

Arbitration of malpractice case

The client’s 2013 malpractice complaint in Rice v. Downs alleged that while serving as counsel to the client and the companies he was affiliated with, the lawyer and the client decided that they would form a company together to develop properties in the affordable housing market. The lawyer prepared the operating agreement for the LLC, which provided that “any controversy between the parties arising out of this Agreement shall be submitted” to arbitration in Los Angeles.

The malpractice complaint alleged a variety of misconduct against the lawyer, including secretly billing the LLC for his time, overcharging, conflicts of interest and providing bad advice.

The lawyer moved to compel arbitration of all the causes of action, based on the arbitration provision in the operating agreement. The trial court granted the motion, and the lawyer won the arbitration, with the arbitrator dismissing the client’s claims with prejudice and declaring that the lawyer had not breached the operating agreement or any other obligation. The trial court almost entirely confirmed the award (although it made dismissal of the client’s complaint without prejudice). Both parties appealed.

“Arising out of”≠“arising in connection with”

In a reversal of the lawyer’s fortune, the court of appeals determined that the arbitration provision in the operating agreement did not apply to the malpractice case.

Under California law, the decision as to whether a contractual arbitration clause covers a particular dispute rests on whether the clause is “broad” or “narrow,” the court of appeals said. “Broad” clauses use language such as “any claim arising from or related to this agreement,” or any claim “arising in connection with” the agreement. With broad language, the court will command arbitration where the fact allegations even “touch matters covered by the contract.”

Not so where the parties choose to provide for arbitration only of controversies “arising from” or “arising out of” an agreement, ruled the court. Those are “narrow” clauses, and the more limited language may not extend to tort claims.

Here, the court framed the issue as whether the particular claims the client asserted were controversies “arising out of” the operating agreements. The court found very significant the fact that the parties broadly consented to jurisdiction in California courts of actions “arising out of, under or in connection with this Agreement or the transactions contemplated by this Agreement” — but they agreed to arbitrate only controversies “arising out of this Agreement.”

Thus, said the court, a tort claim based on violation of an independent duty originating outside of the agreement would not “arise from” the agreement, and would be outside the scope of the arbitration provision. That exactly characterized the claims for malpractice and breach of fiduciary duty, the court held, which were not based on failing to perform under the operating contract, but rather violating duties created by the lawyer-client relationship.

Words matter; so do state rules

Of course, it is no news that a case can turn on contract interpretation. But this one emphasizes the small drafting choices that can send a case to a full-blown jury trial or keep it in arbitration. That’s of special concern to lawyers and their clients at the front end of a relationship — pre-dispute agreements to arbitrate are increasingly included in retainer agreements.

As always, be aware of your jurisdiction’s ethics opinions and rules governing arbitrating malpractice claims. Most opinions on the subject indicate that the client’s informed consent is necessary; ethics opinions in a minority of states require consulting with independent counsel regarding the advisability of agreeing to arbitrate such claims. (Ohio mandates independent consultation by Rule 1.8(h)(1) of its Rules of Professional Conduct.)

What should you do when you are co-counsel on a case or in a deal, and you become aware that the other lawyer has made an error? A new ethics opinion from the New York State Bar Association says that if you reasonably believe that your co-counsel has committed a significant error or omission that may give rise to a malpractice claim, you must disclose the information to the client.

Discovery slip-up

Ethics Opinion 1092 was based on an inquiry received from a lawyer with a dilemma. The lawyer had been brought into a case as co-counsel on the eve of trial, and found that the other lawyer had done virtually no discovery, and had not made any document requests — despite the fact that communications and e-mails between the parties would be critical to the case.

The lawyer believed that the lack of discovery was a significant error, and that it could constitute malpractice. The outcome of the case was still pending. The lawyer was concerned that disclosing the information to the client could undermine the lawyer’s relationship with co-counsel, but was nonetheless convinced that it was in the client’s best interest to reveal the facts as soon as possible.

Interpreting communication, conflict rules

The NYSBA Committee on Professional Ethics noted that prior opinions had consistently held that a lawyer must come clean to the client about his or her own significant errors or omissions in providing legal services. That principle is founded on two ethical duties: (1) the duty to communicate with the client, and provide the information necessary for the client to make informed decisions (see Model Rule 1.4); and (2) the duty to withdraw from the representation where the lawyer’s personal interests conflict with the client’s (see Model Rule 1.7(a)(2)).

Those same rules also raise a duty to communicate with the client about co-counsel’s potential malpractice, the Committee opined.

Respect for client autonomy and decision-making means that the lawyer must provide information about all significant developments affecting the representation. That “applies equally to a significant error or omission by co-counsel that may give rise to a malpractice claim,” said the Committee.

If co-counsel committed such an error, the client would have several options, such as continuing the relationship with co-counsel and reserving a possible malpractice claim; terminating co-counsel; bringing a malpractice action against co-counsel now; or getting independent advice about the options. But without information, the client would be stymied in pursuing any of these choices.

Also, depending on the facts, the lawyer with the inquiry might have a personal conflict of interest that would raise a significant risk of adverse effect on the lawyer’s professional judgment — for instance, if the lawyer’s desire to maintain a good relationship with co-counsel was motivated by personal concerns, like preserving a good referral source (as opposed to being based on the goal of avoiding harm to the client’s case). A personal interest plus risk of adverse effect on professional judgment could raise a duty to withdraw.

Further thoughts …

Instead of the facts posed by the inquiry to the Committee, what if the case is already over, and then you become aware of some error by co-counsel — but the trial outcome was favorable, notwithstanding the mistake? The Committee didn’t consider that possible scenario, but it raises some further questions. For instance, even if the result was an award to the client, is it possible that the award would have been larger absent the error? How far do you have to go to decide such a question?

Even with these open questions, one thing is clear from this recent ethics opinion: at least sometimes, co-counseling a case can result in a duty to have a difficult conversation with your client, and you should keep alert and know your ethics rules if that day should come.

A lawyer’s duty of care to a client does not include raising claims on the client’s behalf that are merely “colorable,” and not actually “viable,” the Oregon Supreme Court held last month. The court said that a “colorability” standard would only promote “scorched earth litigation,” and expose lawyers to malpractice liability based on “hindsight bias.”

Plummeting real estate market — and shareholder oppression

In Rowlett v. Fagan, the plaintiff was a real estate developer who had organized an LLC to develop some valuable properties. When the two other members of the business took actions the plaintiff viewed as unfair to his interests, he sought legal advice from a large Pacific Northwest regional firm.

The firm filed a demand for arbitration based on breach of fiduciary duty. The case went into hiatus at that point. Two years later, the firm amended the arbitration demand and added a claim based on “shareholder oppression.” But in the meantime, the plaintiff’s two partners had ousted him from the LLC and cut him out of a $5.8 million distribution.

The court dismissed the arbitration claim for lack of prosecution; the firm then filed a complaint on the plaintiff’s behalf, with the same claims and a $900,000 prayer for relief.

Fast forward one year. The real estate market had dropped like a rock, and the defendant offered to settle for $200,000, which the plaintiff accepted. Then he turned around and sued his lawyers, alleging, among several other things, that they were negligent in failing to recognize that the factual circumstances gave rise to a claim for shareholder oppression, and in not asserting that claim before the real estate market tanked, at a time when it might have provided some negotiating leverage.

“Colorable” vs. “viable”

The intermediate court of appeals had reversed the trial court’s dismissal of the plaintiff’s claim for negligent failure to timely press the oppression claim, holding that while Oregon law was not clear on whether an oppression claim against an LLC was actually cognizable, the claim was at least colorable, and therefore that the law firm had a duty to raise it. Wrong, said the state supreme court.

The supreme court held that lawyers cannot be held to have breached a duty of care by failing to raise claims that are merely colorable. Rather, a malpractice plaintiff must “prove the existence of ‘a valid cause of action or defense, which, had it not been for the attorney’s alleged negligence, would have brought about a judgment favorable to the client in the original action.'” Thus, a lawyer has no duty to a client to take “‘colorable,’ but ultimately incorrect, legal positions.”

A “colorable” standard of duty “would place lawyers in an untenable position, given that, any time an area of law is unsettled, both sides arguably are ‘colorable,'” said the court. In sum (and perhaps inadvertently in a catchy rhyme), “a lawyer cannot be held liable for failing to assert a claim that is colorable but not viable.”

Vulnerable to second-guessing

The court’s ruling in Rowlett is in line with what the court called the “universally recognized” idea that where the law is unsettled, as it was on the underlying issue of the oppression claim, a lawyer’s judgment call does not subject the lawyer to liability — even if the judgment, as seen in the rear-view mirror, turns out to have been mistaken.

Did you make a New Year’s resolution to shift gears in your law practice? Maybe start practicing in a new area of the law that is unfamiliar to you? It’s always fine to add new skills, of course, and marketing yourself in new ways can be a good strategy for bringing in more revenue in 2016. But merely dabbling in unfamiliar areas without the proper degree of competence and preparation can spell both disciplinary and malpractice problems.

Many lawyers begin to dabble when business slows down or dries up in an area they have become familiar with. That was common during the last economic downturn. It’s hard to measure the impact of dabbling on the incidence of malpractice complaints, but it seems to be responsible in a measurable way for disciplinary complaints against lawyers who do not prepare themselves adequately to face the challenge of doing a new kind of work.

Here in my Ohio bailiwick, Richard A. Dove, director of the Ohio Supreme Court’s Board of Professional Conduct (the adjudicatory arm of the state’s lawyer discipline system), said “We see several disciplinary cases each year in which lawyers, often due to economic pressures, extend their practice beyond their areas of competence. This includes not only legal competence but competence in the use of technology prevalent in the practice of law.”

Sometimes, a lawyer just becomes disenchanted with the law altogether, and wants a different kind of life.

When you are in over your head

A recent disciplinary case from Kansas helps illustrate some of the issues. There, the lawyer was appointed to handle a federal criminal appeal. She asked for and received three extensions of time to file the Eighth Circuit appellate brief on behalf of her client, but never filed it. She didn’t respond to the court of appeals’ show cause order, or the letters requesting her response in the disciplinary investigation. The Kansas Supreme Court’s opinion and the video of the oral argument provide the backstory.

The lawyer had been a patent and trademark associate in a major firm, but became disenchanted with her practice. She left the firm, and decided to “try her hand” at criminal law. She found it eye-opening, she testified; the case, which she took to trial in federal court, included her client making threats to harm her (he said he had his previous counsel’s fingers broken), and mysterious gunshots fired at her rural home by persons unknown. She testified that even before her client’s trial, she realized that criminal law was not going to be a good fit for her, and she returned to school to become credentialed in another field. She accepted the appointment to handle her client’s appeal while continuing to go to school.

Before the state supreme court, the lawyer admitted her misconduct, and neglect. She said, “I was over my head, and did not seek proper advice about getting another attorney to replace” her in handling the appeal.

The Kansas Supreme Court imposed the discipline the lower board had recommended and the lawyer agreed to: indefinite suspension, retroactive to an earlier administrative suspension for failure to register, which would allow the attorney to petition for reinstatement in September 2016. She testified that she did not plan to practice law in the future. The client ended up being allowed to proceed with the appeal with new counsel.

Shifting gears demands preparation

The comments to Model Rule 1.1 on competence recognize that you can strike out for unfamiliar territory and handle matters without “prior experience.” As lawyers (even new law school graduates), our tool kit includes skills that transcend “any particular specialized knowledge.” However, when working in a “novel field,” you must undertake “necessary study” and preparation. And of course, you can also provide competent representation by associating — or at least getting advice from — another lawyer who is already competent in the new field. The resources are out there — our duty of competence requires that we use them when we embark on new paths.

If you only agree to be “local counsel” in a matter, you can rest assured that your limited undertaking also limits the scope of your duties — right? Wrong — as a recent disciplinary case and recent ethics opinion point out.

No “local counsel exception” to conduct rules

If your law school friend is serving as “national counsel” for a company defending product liability cases all over the country, you would naturally welcome a call asking you and your firm to serve as “local counsel” in your state in a claim against the company filed on your home turf.

In taking up the opportunity your friend is offering, you might make some assumptions — you might even regard these assumptions as “customary” in your bailiwick. You might assume, for example, that your firm is only going to be a “mail drop,” and therefore you have no duty to know or advise on the substantive local law at play. You might also assume that your duty to communicate is limited to interchanges with “national counsel.” In fact, since you might never have any contact with the company itself, you might even designate the “national counsel” firm as the “client” in your billing system.

These assumptions may be “customary,” but they almost certainly lack any basis in your state’s version of the Model Rules of Professional Conduct — which make no distinctions between “local counsel” and “primary counsel” when it comes to the duties arising from the attorney-client relationship.

Cautionary tale

Disciplinary Counsel v. Broyles, decided October 29, illustrates how thinking of yourself as “only” local counsel can lead you astray. The Ohio lawyer in the case drew a public reprimand for his conflict of interest in representing a couple in defending a foreclosure action brought by a lender. The conflict consisted of the fact that nine months earlier, a law firm had hired the lawyer to be “local counsel” in representing the same lender against the same couple in obtaining a default judgment in the same foreclosure case against them.

The consent to discipline that the parties filed in the disciplinary case details that after the lender demanded the lawyer’s disqualification in the foreclosure suit, the court granted the motion, and the lawyer appealed.

On appeal, the lawyer argued that he was only providing local counsel services to the law firm that had hired him (which is where he sent his fee invoice) — and that he had never represented the lender. He said “that he was providing a service to the law firm and not to [the lender] as he had no authority to make any representations to the court and did not advocate for any position in the case.” There was no case law to support that contention, and the appeals court held that the lender was the client, and reasonably believed itself to be.

Bottom line: the lawyer not only got disqualified from the foreclosure case based on his confusion about who his client was, but also was embarrassed with a public reprimand based on the violation of Ohio’s version of Model Rule 1.9 on former-client conflicts.

Ethics opinion guidance

In June, the Committee on Professional Ethics of the Association of the Bar for the City of New York issued an ethics opinion underscoring that lawyers who act as local counsel must adhere to the same ethics rules as lead counsel. “An attorney who agrees to act as local counsel may be subjected to obligations and risks that she does not anticipate or intend to assume,” the Committee said. If there are to be any limits on the scope of local counsel’s work, “it is the attorney’s obligation to communicate [them] to the client … rather than to rely on undefined terms, such as ‘local counsel.’ Preferably, local counsel will enter into an independent written retainer agreement with the client.”

This emphasizes the central role of the engagement letter, and the best practice of making the retention agreement directly with the client — not with “lead counsel.” If you intend to limit your role to certain tasks, or a certain phase of the matter, you had better lay that out clearly at the beginning of the representation and get the client’s consent in writing.

As always, communication and documentation are the keys to avoiding unpleasant and potentially expensive surprises.

Only one jurisdiction in the nation — Oregon — requires lawyers to carry legal malpractice insurance. But all the other states have varying requirements about malpractice insurance and disclosing whether or not you carry it. Knowing the rule in your jurisdiction is vital to staying out of ethics trouble.

Disclosure data

A helpful piece by Prof. Roy Simon, Hofstra University distinguished professor of legal ethics, emeritus, in the Association of American Law Schools Professional Responsibility Section Spring newsletter (subscription required) collects the data and points to the ABA’s comprehensive state-by-state chart.

Ohio, for instance, is one of only seven jurisdictions that require lawyers (with certain exceptions) to inform a client directly if they do not carry a certain level of malpractice insurance. And Ohio lawyers who fail to communicate that fact to their clients have been reprimanded, and even suspended (at least when the failure to disclose is coupled with other misconduct). The other states with disclose-to-clients requirements are Alaska, California, New Hampshire, New Mexico, Pennsylvania and South Dakota.

Disclosing on registration forms

Eighteen other jurisdictions require lawyers to disclose on their periodic registration statements whether they carry malpractice insurance. (See the ABA’s chart for the list.) This is in line with the ABA’s Model Court Rule on Insurance Disclosure, adopted in 2004. The concept behind the Model Court Rule is to provide a potential client with the ability to get access to insurance information, according the report of the Standing Committee on Client Protection, which recommended the rule.

At least four states, according to the ABA’s data, are considering a malpractice insurance disclosure rule — Maine, South Carolina, Utah and Vermont.

On the other hand, supporters of mandatory disclosure say that clients should understand the risk involved in retaining a lawyer who is not insured; and absent disclosure, most clients likely assume that the lawyer they hired is insured.

But if you are licensed in the near-majority of jurisdictions with some form of insurance disclosure requirement, this debate is somewhat beside the point. And if your license is in one of the states now considering a disclosure rule, stay tuned. Failing to comply can get you where you don’t want to be — in trouble.

Can you get into trouble by giving a “preliminary opinion” about what a client’s claim might be worth? Possibly. But in Burds v. Hipes, a Georgia lawyer recently dodged a bullet when the state court of appeals held that an initial opinion about the possible value of the client’s claim was not actionable under theories of fraudulent inducement, misrepresentation or breach of fiduciary duty.

In the underlying case, the client hired the lawyer and her firm to represent him on an hourly-fee basis in his employment suit for unpaid wages. The client had tried to interest other lawyers in taking the case on a contingent-fee basis, but got no takers.

“Maybe” statements are not facts

The alleged fraudulent misrepresentation was in an e-mail sent to the client in response to the client’s request for a “clear understanding of the value of the case” and “a budget on filing a claim.” The lawyer’s response was hedged about with numerous qualifications. She told the client that:

he “may be able” to get certain damages;

he “probably could” require the employer to take certain actions;

he “might be able” to obtain other damages, in the alternative;

he “arguably” could rely on certain law;

assuming certain facts, still other damages “might be recoverable.”

“Assuming all stars lined up [and] the jury loved you,” the lawyer continued, the client “might be looking at a figure of $448,725.” She also estimated that it might cost as much as $200,000 to try the case, and concluded that “the value of the case is dependent on many things ultimately, including what we are able to find in our evaluation research.”

The court of appeals held that the trial court correctly granted summary judgment in favor of the lawyer on the client’s fraud claim, citing Georgia authority holding that expressions of opinion or expectation cannot create liability for fraud. The lawyer’s e-mail to the client was merely a “very preliminary opinion … under a best case scenario [and contained] a number of disclaimers and conditional statements.” The statements were “simply not assertions of fact that could support a fraud claim.”

No fraudulent inducement or breach of duty

The client also alleged that he was fraudulently induced to enter into the hourly-fee contract by the lawyer’s statement that she would consider changing the agreement to a blended hourly/contingency contract. The trial court found no evidence that the lawyer “knew all along” that she would not change the agreement; moreover, the actual contract reflected the client’s agreement to pay hourly.

Last, the client alleged that the lawyer breached her fiduciary duty by failing to inform him early in the case that he had little chance of being able to settle it on favorable terms because there were no legal grounds to support it. The lawyer admitted to the client in an e-mail message that most lawyers would have turned down the case because it was difficult; but that was something the client knew already, from having shopped the case to other lawyers. And the court of appeals said that the assertion that the case was difficult was “not evidence that it was untenable or that she breached her fiduciary duty by not telling him so.”

Lawyer wins on fees

The lawyer had counterclaimed for unpaid hourly fees of $6,427, which the trial court granted summary judgment on in her favor. Completing the lawyer’s win, the court of appeals affirmed that judgment.

The take-away? If you are going to express an early opinion about the value of a claim, make sure that it is clearly just that — an opinion — by using language reflecting the degree of uncertainty inherent in such an assessment. The lawyer in Burds was undoubtedly glad that she did that.

Failing to check whether the claim against your client might be covered by insurance can get you in hot water — or at least keep you there, preventing a speedy exit from a malpractice suit, as a Florida lawyer recently learned.

In Pharma Supply, Inc. v. Stein (PACER access ID required), the client alleged it retained the lawyer to “defend its interests” in the underlying suit. At the time, the client had an active insurance policy that would have provided coverage and a defense in the underlying case. The lawyer, however, allegedly failed to review the client’s insurance policies, and didn’t place the insurer on notice. Later, the insurer joined the client’s defense, but refused to reimburse the client for fees and expenses paid before then. The client subsequently sued the lawyer and his firm in federal district court for professional negligence, among other things.

In their motion to dismiss, the lawyer and his firm contended that they had been retained solely to defend the client in the underlying case, and that failing to inquire into the client’s insurance coverage did not breach a duty to the client.

The court rejected that argument. It ruled that the former client’s allegation that it had retained the lawyer and his firm to “defend its interests” was enough to survive a motion to dismiss. A duty to defend the client’s interests could also encompass developing claims against third parties, such as the insurer, that might owe indemnification to the client, the court said. Indeed, the court said, opinions from some jurisdictions have suggested that

[I]n certain circumstances a litigation attorney may have a duty to inquire into a client’s own insurance coverage as a way to provide for alternative recovery or soften the impact of the litigation.

Cases decided in California, Georgia and Alaska for example, point to such a duty, as does a recent New York Appellate Division case. (In a different case in 2000, however, the New York Supreme Court held that a lawyer did not have a duty to advise the clients about a “novel and questionable theory pertaining to their insurance coverage.”)

The defendants in the Pharma Supply case have moved for reconsideration of the court’s ruling denying their motion to dismiss; that motion, converted by the court to a motion for summary judgment, remains pending.

One way to address the issue of client insurance is to raise it in your engagement letter. Asking the client in writing to inform you if there might be insurance that would cover the claim can help identify and resolve any concerns at the front end of a matter.

After winning more than $250,000 at trial, the fiancée of a deceased postal worker came up short in the District of Columbia Court of Appeals based on lack of privity between her and the lawyers who mishandled the decedent’s divorce.

In Scott v. Burgin, the fiancée and the decedent had lived together for years, and he had filled out forms to make her the beneficiary of his Post Office retirement benefits. In January 2006, the fiancée met with a lawyer, asked him to handle decedent’s divorce from his wife, and discussed the pension issue with him. By then, decedent already had terminal bone cancer.

A year later, decedent himself met with the lawyer, and signed a retainer agreement — but it took 11 more months and repeated contacts from the fiancée before the lawyer finally served a divorce complaint on decedent’s wife. When decedent died in April 2008, he was still married, and therefore the Post Office denied the fiancée’s claim to survivor benefits. The benefits went to decedent’s wife, instead.

Reversing the trial court, the court of appeals held that the fiancée lacked standing and was not within the lawyer’s “ambit of care.” Reciting the well-established rule, the court said that lawyers have duties to their clients, not to third parties. But notwithstanding a lack of privity, third party claims can be sustained where the malpractice plaintiffs are the direct and intended beneficiaries of the lawyer’s services.

The classic situation, the court held, arises in the context of will-drafting, where the lawyer has a duty of care to the intended beneficiaries, and the beneficiaries have a direct benefit consisting of a legally enforceable right to their inheritance. In contrast, the court said, a divorce decree does not provide a direct benefit to the fiancée of the divorcing client. Rather, the aim of the divorce is the end of the marriage, and the only parties directly concerned are the married couple and their minor offspring.

If the fiancée were allowed to recover here, the court said, it would expose lawyers to “unforeseen and unmanageable liability” to anyone who would indirectly benefit from the end of the client’s marriage — such as a frustrated creditor whose debtor would have been paid but for the mishandled divorce.

The take-away from this case: The trend in modern cases is to recognize that a lawyer has a duty of care that can extend beyond those strictly in privity with the lawyer-client contract. But different jurisdictions approach the question in different ways that can result in different outcomes. The District of Columbia Court of Appeals in Scott cited and distinguished the intended-beneficiary situation, and thus the lawyer escaped liability. The intended-beneficiary exception to the rule of privity is common across the U.S. But other jurisdictions have considered or adopted different approaches, such as California’s multi-criteria balancing test, set out in 1961 in Lucas v. Hamm. Therefore, evaluating your risk of exposure to claims from third parties requires careful analysis.

If you feel the grim reaper approaching, you’d better inform your clients of any looming statutes of limitations — if you don’t, your estate may be liable on a legal malpractice claim. That’s the message of a case decided earlier this year by the New York court of appeals.

In Cabrera v. Collazo, the plaintiff first hired Collazo to pursue a wrongful death action arising from medical malpractice. The decedent had died in November 2008, and plaintiff hired Collazo the same month. After doing nothing for almost a year, Collazo entered into a co-counsel and fee-sharing agreement with another lawyer, Tanzman. Collazo effectively dropped out of the case and was convicted of immigration fraud.

At some point in 2010, both lawyers stopped responding to the client’s attempts to communicate with them.

With the clock ticking, Tanzman tried to hurry the New York surrogate’s court in issuing letters of administration that were necessary to launch the medical malpractice case; he emphasized to the court that the statute of limitations would run shortly.

On October 6, 2010, the court issued the letters; but Tanzman died of cancer on October 24. The statute of limitations on plaintiff’s wrongful death action expired 11 days later, without any complaint for wrongful death ever having been filed.

It was only eight months later that the client learned that Tanzman had died, and that her medical malpractice claim had likewise died.

In response to the legal malpractice claim against Tanzman’s estate, the executor argued that neglecting a client’s matter is not actionable if the lawyer dies before the applicable limitations period runs against the client in the underlying case. The court of appeals rejected that argument because Tanzman knew he was ill with cancer and might die, but did nothing to protect the statute:

Tanzman died as a result of a chronic, terminal illness that he knew, or should have known, presented the immediate risk that his ability to represent his client’s interests might be impaired…

Despite this knowledge, Tanzman didn’t warn plaintiff so that she could protect her claim.

The court held that potential liability could have been avoided if Tanzman had handed off the case to a successor while there was still time to file it; but here, based on the previous neglect, that possibility was “foreclosed,” so Tanzman had a duty to take action to protect the client’s rights. The court affirmed denial of the estate’s motion to dismiss.

This case underscores the obvious importance to your legal practice of planning ahead — even for your own demise. Do you have a plan in place if you become ill or incapacitated? If you die suddenly? If not, Cabrera teaches that your estate might have to clean up the resulting mess.

Postscript: Model Rule 1.3, comment [5] says that the duty of diligence may require solo practitioners to prepare a plan for their eventual death or disability. The ABA has compiled a list of resources that can be helpful.

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The Law for Lawyers Today is a resource for law firms, law departments and lawyers needing information to meet the challenge of practicing ethically and responsibly. Here you’ll find timely updates on legal ethics, the “law of lawyering,” risk management and legal malpractice, running your legal business— and more.

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